​EU, China to promote climate deal, trade at summit

China and the European Union will voice their commitment to globalisation and fighting climate change at their annual summit this week, in a bid to address the challenge posed by US President Donald Trump’s ‘America First’ policies.

Chinese Premier Li Keqiang will arrive in Brussels today for talks with EU Council President Donald Tusk and European Commission President Jean-Claude Junker at the 19th EU-China summit.

The two-day meeting is being held earlier than usual at the request of China, which has moved to position itself as a champion of globalisation in the wake of growing populist opposition to free trade and immigration in the West.

“Chinese Premier Li Keqiang and the leaders of European institutions will issue a joint statement in support of the Paris Agreement,” said Li Gang, a research fellow at the Institute of European Studies in the Chinese Academy of Social Sciences in Beijing.

“With the rise of trade protectionism and de-globalisation, China and the EU will work together to maintain trade liberalisation and multilateralism.”

The summit comes just days after Trump reportedly decided to withdraw the US from the Paris climate agreement, a move that, if confirmed, would leave China and the EU as the two major economic blocs ready to implement the pact that seeks to curb global warming.

It also follows discordant G7 and NATO meetings last weekend that failed to reassure European leaders about US commitment to free trade and mutual defence, prompting German Chancellor Angela Merkel to warn that Europe must forge its own path forward.

Trump has vowed to protect American jobs and businesses from foreign competition – singling out both China and Germany’s trade surpluses as problems –by negotiating new bilateral trade deals to replace multilateral agreements, such as the Trans-Pacific Partnership.??

Reciprocity in trade and investment

Strong economic ties form the backbone of bilateral relations – EU is China's biggest trading partner, while China is the EU's second biggest – and their agreement in principle about free trade provides now momentum for deepening partnership.

But compared to progress on climate efforts, the summit is less likely to solve thorny questions about market access for European firms in China or China’s trade status under the World Trade Organisation (WTO).

EU leaders have urged China to follow through commitments made by President Xi Jinping in his pro-globalisation speech at Davos in January and take concrete actions to open its markets more to European businesses.

The EU wants China to speed up negotiations on a bilateral investment treaty that would offer companies from both sides investment protections and market access.

For its part, Beijing continues to press the EU to abide by its WTO commitments and recognise China as market economy; a move that would require the 28-nation bloc to stop anti-dumping investigations against Chinese imports.

While these disputes make headlines frequently, they are not likely to become stumbling blocks for deepening ties in other areas.

“I think that these are issues that have actually existed for a while, especially market access and dumping investigations, and have not prevented the relation from moving forward,” said Agatha Kratz, associate policy fellow at the European Council on Foreign Relations.

“Both sides can benefit from more openness to each other but need to find comfortable ground and conditions to this further opening and cooperation.”

Project of the century

China’s ambitious plan to revive the ancient Silk Road trade routes provides a new set of opportunities for increased cooperation in trade and infrastructure.

The Belt and Road initiative seeks to boost trade and connectivity through a trillion dollars’ worth investment into building railroads, ports and other infrastructure links stretching from Asia to Europe and Africa.

At the first Belt and Road summit in Beijing in mid-May, President Xi hailed the initiative as “the project of the century”, and one that promotes a more balanced and inclusive form of globalisation.

But while Hungary and other Eastern European countries have backed the project, Western European countries have been more hesitant, asking for more details about the project and calling for open tenders for projects under the initiative.

The European Commission is also currently investigating whether a Chinese-built rail link between Serbia and Hungary, a showcase for the Belt and Road initiative in Europe, followed EU rules that require public tenders for large transport projects.

“The difference between China and the EU on globalisation is that China highlights development-oriented globalisation while the EU promotes rule-based globalisation,” said Wang Yiwei, Director of the Centre of European Studies at the Renmin University in Beijing.

“It’s both encouraging and worrying. Europe is looking at China with a different mentality. It no longer regards China as a developing country, and therefore demands reciprocity,” he said.

Rethinking relations

Beijing and Brussels are increasingly finding themselves on the same side on major global issues, despite long-standing disagreements about trade imbalances, market access and human rights.

The EU-China summit provides them an opportunity signalling that the major economic poles in the world remain committed to fighting climate change and upholding an open world economy in the post-Brexit, Trump era.

But it also highlights the need for China and the EU to manage gaps in their expectations about the sort of globalisation they wish to promote together: one focused on connectivity-driven growth or a vision of broader mutual openness.